US Companies and Employees Have Different Dreams About This Year's Wage Increases

Companies 4.1% vs Workers 6.7% Expected

"They'll raise salaries at least as much as inflation" vs "Let's tighten our belts as the economy slows down"

As concerns about a U.S. economic recession grow and high inflation persists, company executives and employees are reportedly having 'different dreams under the same roof' regarding this year's wage increase rates, the Wall Street Journal (WSJ) reported on the 3rd (local time).

According to a survey conducted by Mercer, a U.S. benefits consulting firm, targeting about 1,000 companies, companies are considering a total salary increase of 4.1% this year, including an annual performance bonus increase of 3.8%.

Employees, however, want a larger increase than companies expect. A research firm affiliated with payroll provider ADP surveyed 2,000 workers and found that employees are confident about a salary increase this year and expect an average raise of 6.7%. According to ADP, workers' wages increased by an average of 6.5% last year.

Although the U.S. inflation rate is slowing down, it remains high at 5.0% as of April. Due to the high inflation and the resulting surge in living costs, workers' demands for wage increases are inevitably intensifying. On the other hand, companies are preparing for a possible recession this year by cutting costs, signaling a tug-of-war with employees over wage increase rates. The U.S. economy entered a recession phase in the first quarter of this year, with a growth rate sharply dropping to 1.1% compared to the previous quarter's 2.6%.

The lead in this year's confrontation is expected to be held by company executives rather than workers. This is because layoffs, which were mainly concentrated in tech companies last year, have spread across industries this year, increasing the number of workers who must worry about job security rather than wage increases. According to the March Job Openings and Labor Turnover Survey (JOLTs) released by the U.S. Department of Labor the day before, the number of job openings in private companies in March was 9.59 million, marking the third consecutive monthly decline. This is the lowest monthly figure in about two years since April 2021 and also falls short of Wall Street's forecast of 9.7 million.

The WSJ reported, "Rising living costs have led many workers to demand substantial wage increases, and hopes are growing for wage hikes across the economy. However, concerns about a recession and high interest rates are prompting companies to pursue efficient management, including cost control of labor expenses."

This content was produced with the assistance of AI translation services.